Additional Information No dividends are declared or paid in 2018. Issued additio

Question

Additional Information

No dividends are declared or paid in 2018.

Issued additional stock for $16,800 cash in 2018.

Purchased equipment for cash in 2018; no equipment was sold in 2018.

1. Use the above financial statements and additional information to prepare a statement of cash flows for the year ended December 31, 2018, using the indirect method. (Amounts to be deducted should be indicated by a minus sign.)
  

MONTGOMERY INC.
Comparative Balance Sheets
December 31, 2018 and 2017 2018 2017 Assets Cash $ 58,200 $ 58,100 Accounts receivable, net 18,300 22,300 Inventory 164,100 128,800 Total current assets 240,600 209,200 Equipment 90,900 76,200 Accum. depreciation—Equipment (41,000 ) (28,100 ) Total assets $ 290,500 $ 257,300 Liabilities and Equity Accounts payable $ 43,600 $ 46,600 Salaries payable 900 1,100 Total current liabilities 44,500 47,700 Equity Common stock, no par value 202,500 185,700 Retained earnings 43,500 23,900 Total liabilities and equity $ 290,500 $ 257,300

Explanation / Answer

MONTGOMERY INC Cash Flow Statement For the year ended December 31, 2018 Cash flows from operating activities Net Income $   19,600 Adjustment to reconcile net income to: Depreciation expense $   12,900 Decrease in accounts receivable $      4,000 Increase in inventory $ (35,300) Decrease in accounts payable $   (3,000) Decrease in salaries payable $       (200) $ (21,600) Net cash used by operating activities $   (2,000) Cash flows from investing activities Purchase of equipment $ (14,700) Net cash used by investing activities $ (14,700) Cash flows from financing activities Proceeds from issue of stock $   16,800 Net cash provided by financing activities $   16,800 Net increase in cash and cash equivalents $         100 Cash and cash equivalents at beginning of period $   58,100 Cash and cash equivalents at end of period $   58,200

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